The West Considers Using Russia's Frozen Assets

And now Putin wants to talk because he fears his "creditors" will come looking for him

Photo by Radek Homola on Unsplash

Could it always have been about money, after all? Honestly, I always knew it was about money and have written that here many times. It was never about “Russian language being forbidden in Ukraine.” The first language for most Ukrainians is Russian. It was never about “Ukraine is going to invade Russia.” 

It was always just about money and the insatiable need for more. After Russia illegally annexed Crimea, millions were made by Kremlin-connected businessmen and thugs who appropriated hotels and properties abandoned by pro-Kyiv Ukrainians. The properties were obtained for a song or a dance — both acts were unnecessary. The resort areas were rebuilt and became the playground of well-to-do Russians, pushing out the Ukrainian working classes who used to vacation there. The logic was simple: If little Crimea could be so profitable, then imagine how much we could make by seizing all of Ukraine.

Russia, of course, didn’t expect the reaction that they got. The civilized nations of the world united against Russia’s aggression. $300 billion in sovereign assets, meaning Putin’s money he uses to keep himself well-protected and his cronies well-oiled, were frozen. The assumption was that when Russia won the war or some other kind of settlement was made, the money would be returned. Lately, however, there has been serious talk in European capitals and Washington to transfer that $300 billion to supply Kyiv and help them rebuild. 

The Biden administration is quietly signaling new support for seizing more than $300 billion in Russian central bank assets stashed in Western nations, and has begun urgent discussions with allies about using the funds to aid Ukraine’s war effort at a moment when financial support is waning, according to senior American and European officials (U.S. and Europe Eye Rusian Assets).

Putin realizes that if this money goes to Kyiv, it will never be returned to Moscow. A mobster in St. Petersburg in 1997 told me about a guy who owed him and others millions of dollars. He then explained to me that the guy was one of the safest people in the city. 

“If anyone hurts him, they must take on his debt to others. So, we all leave him alone and hope his businesses will turn around.” 

Could the frozen $300 billion have been the bullet-proof shield that existed around — the Putin Mobile similar to what Pope John Paul had after the attempt on his life?

Mr. Putin has been signaling through intermediaries since at least September that he is open to a cease-fire that freezes the fighting along the current lines, far short of his ambitions to dominate Ukraine, two former senior Russian officials close to the Kremlin and American and international officials who have received the message from Mr. Putin’s envoys say (Open to a Cease-Fire).

If serious negotiations commence, the assets most likely won’t be touched. Maybe in some agreement, a portion of them would go for reparations. Still, the bulk of the money would eventually be returned to Russia with the likelihood that Russia would remain cut off from Western financial and credit institutions. Putin is a master at survival, and because he is morally empty, he is always willing to do things and go to dark places that most reasonable people would never dare. This is why any “feelers” for peace would have to be taken not with a grain of salt but a whole mine’s worth. 

Putin and Putinists like to talk about how well Russia’s economy has been doing. They discuss how Western sanctions have failed, but this is a mirage. The country is teetering because the bulk of new economic activity is war-related and being paid for by the printing of money, which is flowing at record levels into the hands of the citizens. Elvira Nabiullina, the country’s central bank governor, is warning of an overheating.

“The economy is expanding so rapidly because it is using almost all the resources available,” said Nabiullina.

“A stubborn high inflation is evidence that the economy has deviated from its potential and lacks the capacities to meet soaring demand,” she added. Russia reported 5.5% GDP growth in the third quarter of this year — reversing a 3.5% decline in the same period last year, while unemployment has hit a record low as many have left the country or are fighting in the war.

Reports suggest that much of the country’s growth is due to massive military and government spending. Russia’s economic growth has spurred inflation, which reached 7.48% in November — up from 6.69% in October, according to official statistics (Boss Has Issued a Warning).

The Kremlin has issued yet another of its empty threats should the frozen assets be transferred to Kyiv. There really isn’t a whole lot Russia can do to stop this from happening, and it will likely be yet another line in the sand that Biden and his colleagues will calmly step over. 

The Kremlin has threatened Europe and the US with “serious consequences”, including tit-for-tat financial seizures or even a break in diplomatic relations, if Russian assets held abroad are given to aid the Ukrainian budget and war effort (Russian Warns U.S. and Europe).

“A break in diplomatic relations.” Sounds scary, Vlad. Is there anything else we need to know before we take your money?

Putin, of course, does not care about Russia losing the money. He cares about how it will make him look like a punk. He cares about losing HIS money, and he fears that the modern-day Decemberists will be stalking the Kremlin’s halls at night with torches, looking for the powerless coward from Baskov Lane, Leningrad. 

Let me give them a hint: “He’s hiding under Lenin the mausoleum.”